AMERICAN TELECASTING INC/DE/, DEF 14A, 1999-03-26

AMERICAN TELECASTING INC/DE/
DEF 14A, 1999-03-26
CABLE & OTHER PAY TELEVISION SERVICES

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<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14a INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Registrant [ ]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>

American Telecasting, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[ ] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:

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(2) Aggregate number of securities to which transaction applies:

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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):

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(4) Proposed maximum aggregate value of transaction:

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(5) Total fee paid:

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[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or Schedule and the date of its filing.

(1) Amount Previously Paid:

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(2) Form, Schedule or Registration Statement No.:

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(3) Filing Party:

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(4) Date Filed:

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<PAGE> 2

AMERICAN TELECASTING, INC.
5575 TECH CENTER DRIVE, SUITE 300
COLORADO SPRINGS, COLORADO 80919

---------------------

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

---------------------

To the Stockholders of American Telecasting, Inc.:

PLEASE TAKE NOTICE that the Annual Meeting of Stockholders of American
Telecasting, Inc. (the "Company"), will be held on Thursday, April 22, 1999, at
10:00 a.m., Mountain Time at the Marriott Hotel, 5580 Tech Center Drive,
Colorado Springs, Colorado 80919, to consider and act upon the following
matters:

I. to elect six directors for the ensuing year;

II. to approve the appointment of Arthur Andersen LLP as the independent
auditors of the Company for the fiscal year ending December 31, 1999; and

III. to transact such other business as may properly come before the meeting.

In accordance with Delaware law, a list of the Company's stockholders
entitled to vote at the meeting will be available for examination at the
Company's headquarters for ten business days prior to the meeting, between the
hours of 9:00 a.m. and 5:00 p.m., Mountain Time, and at the meeting, during the
entire time thereof.

Accompanying this notice is a proxy card and Proxy Statement and a copy of
the Company's Annual Report for the year ended December 31, 1998. Whether or not
you expect to be present at the meeting, please sign and date the proxy card and
return it in the enclosed envelope provided for that purpose prior to the date
of the Annual Meeting. The Proxy may be revoked at any time prior to the time
that it is voted at the meeting. Only stockholders of record at the close of
business on March 5, 1999 will be entitled to vote at the meeting.

BY ORDER OF THE BOARD OF DIRECTORS
/s/ ROBERT D. HOSTETLER

ROBERT D. HOSTETLER
President and Chief Executive
Officer

March 26, 1999
<PAGE> 3

AMERICAN TELECASTING, INC.
5575 TECH CENTER DRIVE, SUITE 300
COLORADO SPRINGS, COLORADO 80919

---------------------

PROXY STATEMENT
FOR THE
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 22, 1999

---------------------

This Proxy Statement is being furnished to the stockholders of American
Telecasting, Inc. (the "Company") in connection with the solicitation of proxies
by the Board of Directors of the Company for the 1999 Annual Meeting of
Stockholders and any adjournments thereof (the "Annual Meeting"). The Annual
Meeting will be held on Thursday, April 22, 1999 at the Marriott Hotel, 5580
Tech Center Drive, Colorado Springs, Colorado 80919, at 10:00 a.m., Mountain
Time.

This Proxy Statement and the accompanying proxy card are being sent to
stockholders on or about March 29, 1999. The Annual Report of the Company for
the fiscal year ended December 31, 1998 is being mailed to stockholders with
this Proxy Statement and the accompanying proxy card.

VOTING

GENERAL

Only holders of record of the Company's Class A Common Stock, par value
$.01 per share (the "Class A Common Stock"), as of the close of business on
March 5, 1999 (the "Record Date") will be entitled to vote at the Annual
Meeting. As of the Record Date, 25,743,607 shares of Class A Common Stock were
issued and outstanding. Each share of Class A Common Stock outstanding on the
record date is entitled to one vote on each matter submitted to the
stockholders.

The presence in person or by proxy of the holders of a majority of the
shares of Class A Common Stock issued and outstanding and entitled to vote at
the Annual Meeting is necessary to constitute a quorum at the meeting. The
affirmative vote of the holders of a plurality of the shares of Class A Common
Stock present in person or represented by proxy at the Annual Meeting and
entitled to vote thereat is required for the election of directors. The
affirmative vote of the holders of a majority of the shares of Class A Common
Stock present in person or represented by proxy at the Annual Meeting and
entitled to vote thereat is required for approval of all other items being
submitted to the stockholders for their consideration. Donald R. DePriest,
Chairman of the Board of the Company, controls directly or indirectly
approximately 18.9% of the Company's outstanding Class A Common Stock, including
the approximately 8.4% held of record by MCT Investors, L.P. ("MCT"). Mr.
DePriest has indicated his intention to vote FOR the election to the Board of
Directors of the individuals named as nominees herein, and FOR the appointment
of Arthur Andersen LLP as independent auditors of the Company.

An automated system administered by the Company's transfer agent will
tabulate the votes. Abstentions and proxies relating to "street name" shares for
which brokers have not received voting instructions from the beneficial owner
("Broker Non-Votes") will be counted to determine whether a quorum is present.
With respect to all matters submitted to the stockholders for their
consideration, abstentions will be counted as part of the total number of votes
cast on such proposals in determining whether the proposals have received the
requisite number of favorable votes, whereas Broker Non-Votes will not be
counted as part of the total number of votes cast on such proposals. Thus,
abstentions will have the same effect as votes against any given proposal,
<PAGE> 4

whereas Broker Non-Votes will have no effect in determining whether any given
proposal has been approved by the stockholders.

VOTING BY PROXY

With respect to the proposal regarding election of directors, stockholders
may (a) vote in favor of all nominees, (b) withhold their votes as to all
nominees, or (c) withhold their votes as to specific nominees by so indicating
in the appropriate space on the enclosed proxy card. With respect to all other
proposals being submitted to the stockholders for their consideration,
stockholders may (i) vote "for" such proposal, (ii) vote "against" such
proposal, or (iii) abstain from voting on such proposal. All properly executed
proxy cards delivered by stockholders and not revoked will be voted at the
Annual Meeting in accordance with the directions given. IF NO SPECIFIC
INSTRUCTIONS ARE GIVEN WITH REGARD TO THE MATTERS TO BE VOTED UPON, THE SHARES
REPRESENTED BY A SIGNED PROXY CARD WILL BE VOTED "FOR" THE ELECTION OF ALL
DIRECTORS, AND "FOR" THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT
AUDITORS. Management knows of no other matters that may come before the meeting
for consideration by the stockholders. However, if any other matter properly
comes before the meeting, the persons named in the enclosed proxy card as
proxies will vote upon such matters in accordance with their judgment.

Stockholders who do not expect to attend the Annual Meeting in person are
urged to execute and return the enclosed proxy card promptly. Any stockholder
delivering a proxy has the power to revoke it at any time before it is voted by
giving written notice of revocation to the Secretary of the Company, by
executing and delivering to the Secretary a proxy card bearing a later date, or
by voting in person at the Annual Meeting. Any stockholder also may be
represented by another person at the Annual Meeting by executing a form of proxy
designating such person to act on the stockholder's behalf at the meeting.

In addition to soliciting proxies through the mail, the Company may solicit
proxies through its directors, officers and employees in person and by
telephone. Directors, officers and employees will receive no additional
compensation for such solicitation. The Company has retained Georgeson &
Company, Inc., a proxy solicitation firm, to assist in the solicitation of
proxies at a fee of approximately $7,500 plus reimbursement of out-of-pocket
costs. All expenses incurred in connection with the solicitation of proxies
(including the cost of preparing, assembling, printing and mailing this Proxy
Statement, the accompanying proxy card and any additional material which may be
furnished to stockholders) will be borne by the Company. Brokerage firms,
nominees, custodians and other fiduciaries may be requested to forward proxy
materials to the beneficial owners of shares held of record by them, and will be
reimbursed for their expenses incurred in connection therewith.

2
<PAGE> 5

STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth the beneficial ownership of the Company's
Class A Common Stock at January 31, 1999 by (i) each stockholder known by the
Company to be the beneficial owner of more than 5% of the outstanding shares of
Class A Common Stock, (ii) each director or nominee, (iii) each executive
officer named in the Summary Compensation Table, and (iv) all directors and
executive officers as a group. Unless otherwise indicated, each such person
(alone or with family members) has sole voting and dispositive power of the
shares listed opposite such person's name. The address of MCT is 1555 King
Street, Suite 500, Alexandria, Virginia, 22314. The address of CFW
Communications Company ("CFW") is 401 Spring Lane, Suite 300, Waynesboro,
Virginia 22980.

<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
NAME BENEFICIAL OWNERSHIP OF CLASS
---- -------------------- --------
<S> <C> <C>
MCT Investors, L.P.(1)...................................... 2,163,648 8.4%
CFW Communications Company(2)............................... 1,486,434 5.8%
James S. Quarforth(3)....................................... 5,570 *
Donald R. DePriest(4)....................................... 4,874,135 18.9%
Richard F. Seney(5)......................................... 112,250 *
Robert D. Hostetler(6)...................................... 547,975 2.1%
Carl A. Rosberg(7).......................................... 1,900 *
Mitchell R. Hauser.......................................... 2,418 *
David K. Sentman(8)......................................... 65,001 *
Terry J. Holmes(9).......................................... 78,925 *
Bryan H. Scott (10)......................................... 17,473 *
Nasser Sharabianlou......................................... 0 *
All current directors and executive officers as a group (12
persons).................................................. 5,719,551 22.2%
</TABLE>

- ---------------

* Less than one percent

(1) Consists solely of 2,163,648 shares which are held of record by MCT but
owned beneficially by Donald R. DePriest. Mr. DePriest is the Chairman of
the Board, President and sole stockholder of MedCom Development Corporation
("MedCom"), which is the sole general partner of MCT. Mr. DePriest has sole
voting and investment power with respect to these shares, which power is
exercised through MedCom and MCT. MCT disclaims beneficial ownership with
respect to these shares.

(2) Includes 74,322 shares owned by CFW Communications Foundation, a Virginia
non-stock corporation. All of the directors of CFW are also directors of
CFW Communications Foundation.

(3) Includes 20 shares owned by Mr. Quarforth's minor children, of which Mr.
Quarforth disclaims beneficial ownership. Excludes 1,486,434 shares owned
beneficially by CFW, of which Mr. Quarforth disclaims beneficial ownership.
Mr. Quarforth is President and Chief Executive Officer of CFW.

(4) Includes 2,163,648 shares held of record by MCT over which Mr. DePriest has
sole voting and investment power, 41,058 shares held of record by MedCom
over which Mr. DePriest has sole voting and investment power, and 2,645,236
shares held directly by Mr. DePriest. See Note 1 above. Also includes
24,193 shares held of record by CD Partners ("CD Partners"), a general
partnership of which Mr. DePriest is a 50% partner, over which Mr. DePriest
has shared voting and investment power. Mr. DePriest disclaims beneficial
ownership over all shares held by MCT and CD Partners, except to the extent
of Mr. DePriest's pro rata interest in the profits and losses of MCT and CD
Partners, respectively.

(5) Excludes 2,163,648 shares held by MCT, of which Mr. Seney disclaims
beneficial ownership. Mr. Seney is Vice President and General Manager of
MedCom, the sole general partner of MCT.

(6) Includes the right to acquire 100,000 shares of Class A Common Stock within
60 days upon the exercise of outstanding stock options.

3
<PAGE> 6

(7) Excludes 1,486,434 shares owned beneficially by CFW, of which Mr. Rosberg
disclaims beneficial ownership. Mr. Rosberg is Senior Vice President and a
director of CFW.

(8) Includes the right to acquire 65,001 shares of Class A Common Stock within
60 days upon the exercise of outstanding stock options.

(9) Includes the right to acquire 50,001 shares of Class A Common Stock within
60 days upon the exercise of outstanding stock options.

(10) Includes the right to acquire 17,168 shares of Class A Common Stock within
60 days upon the exercise of outstanding stock options.

PROPOSAL NO. 1 -- ELECTION OF DIRECTORS

Each director of the Company is elected to serve until the next annual
meeting of the stockholders or until his successor is duly elected and
qualified. The Board of Directors has nominated the six persons named below to
serve as directors until the next Annual Meeting of Stockholders or until their
successors are duly elected and qualified. All nominees are currently members of
the Board.

Each of the nominees has consented to serve on the Board of Directors until
the next Annual Meeting of Stockholders or until his successor is duly elected
and qualified. If any of the nominees should be unable to serve for any reason
(which management has no reason to anticipate at this time), the Board of
Directors may designate a substitute nominee or nominees (in which case the
persons named as proxies in the enclosed proxy card will vote all valid proxy
cards for the election of such substitute nominee or nominees), allow the
vacancy or vacancies to remain open until a suitable candidate or candidates are
located, or by resolution provide for a lesser number of directors.

The affirmative vote of the holders of a plurality of the shares of Class A
Common Stock present in person or represented by proxy at the Annual Meeting is
required for the election of directors.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE
NOMINEES NAMED HEREIN (ITEM NO. 1 ON THE ENCLOSED PROXY CARD).

The following table sets forth certain biographical information as of
January 31, 1999 about each of the individuals nominated for election as a
Director of the Company. Information with respect to the number of shares of the
Company's Class A Common Stock beneficially owned by each of the nominees,
directly or indirectly, as of January 31, 1999, appears on page 3 of this Proxy
Statement.

4
<PAGE> 7

<TABLE>
<CAPTION>
NAME AND AGE DIRECTOR SINCE: PRINCIPAL OCCUPATION AND OTHER INFORMATION
------------ --------------- ------------------------------------------
<S> <C> <C>
Richard F. Seney (44) March 1990 Vice Chairman of the Board of Directors of the
Company since October 1993; Secretary of the
Company since 1988; Treasurer of the Company from
1988 to March 1994; Vice President and General
Manager of MedCom since 1987; limited partner of
MCT.
Robert D. Hostetler (57) March 1994 President and Chief Executive Officer of the
Company since January 1996; Vice
President -- Development of the Company from
January 1995 through December 1995; Director of
Mergers and Acquisitions of the Company from
December 1993 through December 1994; from 1988 to
1993 served as director and/or officer of several
entities engaged in the business of constructing
and operating wireless cable television systems,
certain of which were acquired by the Company in
December 1993.
Mitchell R. Hauser (39) October 1993 President and Chief Executive Officer of WJG
Maritel, a marine telecommunications company,
since July 1996; Associate of MCT Investors from
early 1994 through July 1996; Vice President of
Granite Capital, an investment manager, from
August 1990 to September 1993; limited partner of
MCT.
James S. Quarforth (44) January 1991 President, Chief Executive Officer and Director
of CFW, a publicly traded telecommunications
company; has served in various capacities with
CFW since 1984, including Executive Vice
President -- Operations, Vice President --
Administration and Controller; currently a
Director of Virginia Financial Corporation, a
publicly traded bank.
Carl A. Rosberg (46) April 1994 Senior Vice President and Director of CFW; has
served in various capacities with CFW since 1988,
including Vice President -- Administration and
Senior Vice President -- Operations.
</TABLE>

5
<PAGE> 8

ORGANIZATION AND REMUNERATION OF THE BOARD

The Board of Directors has an Audit Committee, a Compensation Committee and
an Executive Committee.

The Audit Committee oversees the audit of the Company's accounts through
independent accountants whom it recommends for selection by the Board of
Directors. The Audit Committee is also responsible for reviewing the adequacy of
the Company's system of internal accounting controls and the scope and results
of the Company's procedures for internal auditing. The Audit Committee is
authorized to direct and supervise such special investigations, as it may deem
appropriate. The Audit Committee held two meetings during fiscal year 1998. The
current members of the Audit Committee are Mr. Quarforth, Mr. Rosberg and Mr.
Seney.

The Compensation Committee monitors and recommends the compensation to be
paid to management of the Company. The Compensation Committee's responsibilities
include formulating the Company's compensation philosophy, establishing the
policies, standards and objectives upon which compensation decisions are based,
and making recommendations to the Board of Directors regarding the cash
compensation to be paid to executive officers and other employees. The
Compensation Committee also makes recommendations to the Board of Directors
regarding option grants under the Company's stock option plan and reviews and
revises all of the Company's plans that are intended to qualify under Section
401 of the Internal Revenue Code. The Compensation Committee members communicate
with each other from time to time in person and by telephone and act on matters
by way of a formal meeting or by unanimous written consent. The Compensation
Committee held one meeting and acted once by unanimous written consent during
fiscal year 1998. The current members of the Compensation Committee are Mr.
DePriest, Mr. Quarforth and Mr. Seney.

The Executive Committee has the authority to exercise all the powers and
authority of the Board of Directors in the management and business of the
Company during the interval between regular meetings of the Board of Directors,
subject to certain limitations imposed by law, the Company's Restated
Certificate of Incorporation and Amended and Restated Bylaws, or by resolution
of the Board of Directors. The Executive Committee also has the power to
authorize the issuance of the Company's Common Stock. The Executive Committee
members communicate with each other from time to time by telephone or in person
and act on matters by means of a formal meeting or by unanimous written consent.
The Executive Committee acted three times by unanimous written consent during
fiscal year 1998. The members of the Executive Committee are Mr. DePriest, Mr.
Hostetler, Mr. Quarforth and Mr. Seney.

The Company's Board of Directors held fifteen meetings during the fiscal
year ended December 31, 1998, and also acted from time to time by unanimous
written consent. Each director attended at least 75% of all meetings of the
entire Board and the committees on which he served.

Directors do not receive compensation for service on the Board of Directors
or any committee thereof but are reimbursed for their out-of-pocket expenses
incurred in connection with attending Board meetings. Directors, as such, do not
participate in any executive compensation plans.

6
<PAGE> 9

COMPENSATION AND OTHER INFORMATION CONCERNING EXECUTIVE OFFICERS

EXECUTIVE COMPENSATION SUMMARY

The following table sets forth the annual salary, bonus and other
compensation for each of the last three fiscal years awarded to or earned by the
Company's chief executive officer and the four other most highly compensated
executive officers of the Company (collectively, the "Named Executive
Officers").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM
COMPENSATION AWARDS
-------------------
SECURITIES
UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS(#)(1) COMPENSATION
--------------------------- ---- -------- ------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Robert D. Hostetler, President 1998 $218,237 $38,500(2) 150,000(3) $ 5,000(4)
and Chief Executive Officer 1997 210,790 75,700(5) 150,000(6) 3,800(7)
1996 190,000 60,000(8) 120,000(9) 70,466(10)(11)
David K. Sentman, 1998 $160,385 $40,096(12) 110,000(13) $ 5,000(4)
Senior Vice President and 1997 145,000 55,000(14) 90,000(15) 4,750(7)
Chief Financial Officer 1996 135,000 67,500(16) 70,000(17)(18) 14,710(11)(19)
Terry J. Holmes, 1998 $146,307 $37,664(12) 90,000(20) $11,540(4)(21)
Senior Vice President 1997 144,425 50,000(22) 70,000(23) 11,018(7)(21)
1996 130,607 60,500(24) 50,000(18)(25) 9,417(11)(21)
Bryan H. Scott, 1998 $ 92,961 $23,996(12) 34,500(26) $ 4,696(4)
Vice President 1997 75,106 19,580(27) 24,500(28) 4,506(7)
-- Engineering 1996 67,217 15,224(29) 14,500(30) 3,862(11)
Nasser Sharabianlou, 1998 $ 89,827 $30,436(12) 20,000(32) $ 1,558(4)
Vice President -- Telecom
Services(31)
</TABLE>

- ---------------

(1) The Company does not have any restricted stock, stock appreciation rights
or long-term incentive plans.

(2) This amount represents a pro rata portion of Mr. Hostetler's bonus, with
respect to the period from January 1, 1998 through June 30, 1998, of
$77,000, which was paid in October 1998, based upon his performance for the
period from July 1, 1997 through June 30, 1998. See "Report of the Board of
Directors on Executive Compensation and Stock Option
Repricing -- Compensation of the President and Chief Executive Officer."

(3) Consists solely of replacement options granted in exchange for the
cancellation of all outstanding options held by Mr. Hostetler in connection
with the Company's repricing of stock options on April 23, 1998. See
"Report of the Board of Directors on Executive Compensation and Stock
Option Repricing."

(4) Includes the following contributions made by the Company to the Company's
401(k) plan on behalf of the Named Executive Officers during 1998: Mr.
Hostetler -- $5,000, Mr. Sentman -- $5,000, Mr. Holmes -- $5,000, Mr.
Scott -- $4,696, Mr. Sharabianlou -- $1,558.

(5) This amount includes a pro rata portion ($37,200) of Mr. Hostetler's bonus,
with respect to the period from January 1, 1997 through June 30, 1997, of
$97,200, which was paid in August 1997, based upon his performance for the
period from January 1, 1996 through June 30, 1997. This amount also
includes a pro rata portion ($38,500) of Mr. Hostetler's bonus, with
respect to the period from July 1, 1997 through December 31, 1997, of
$77,000 which was paid in October, 1998, based upon his performance for the
period from July 1, 1997 through June 30, 1998. See "Report of the Board of
Directors on Executive Compensation and Stock Option
Repricing -- Compensation of the President and Chief Executive Officer."

7
<PAGE> 10

(6) Includes 120,000 replacement options granted in exchange for the
cancellation of all outstanding options held by Mr. Hostetler in connection
with the Company's repricing of stock options on October 30, 1997. See
"Report of the Board of Directors on Executive Compensation and Stock
Option Repricing."

(7) Includes the following contributions made by the Company to the Company's
401(k) plan on behalf of the Named Executive Officers during 1997: Mr.
Hostetler -- $3,800, Mr. Sentman -- $4,750, Mr. Holmes -- $4,750, Mr.
Scott -- $4,506.

(8) This amount represents a pro rata portion of Mr. Hostetler's bonus, with
respect to the period from January 1, 1996 through December 31, 1996, of
$97,200, which was paid in August 1997, based upon his performance for the
period from January 1, 1996 through June 30, 1997.

(9) Includes 45,000 replacement options granted in exchange for the
cancellation of all outstanding options held by Mr. Hostetler in connection
with the Company's repricing of stock options on December 17, 1996; and
75,000 options granted earlier in 1996 and replaced on December 17, 1996.
See "Report of the Board of Directors on Executive Compensation and Stock
Option Repricing."

(10) Includes $66,666 paid to Mr. Hostetler pursuant to a non-competition
provision contained in his original employment agreement with the Company.

(11) Includes the following contributions made by the Company to the Company's
401(k) plan on behalf of the Named Executive Officers during 1996: Mr.
Hostetler -- $3,800, Mr. Sentman -- $4,750, Mr. Holmes -- $4,241, Mr.
Scott -- $3,862.

(12) This amount was paid during 1999 based upon Named Executive Officers'
performance in 1998.

(13) Includes 90,000 replacement options granted in exchange for the
cancellation of all outstanding options held by Mr. Sentman in connection
with the Company's repricing of stock options on April 23, 1998. See
"Report of the Board of Directors on Executive Compensation and Stock
Option Repricing."

(14) This amount was paid during 1998 based upon Mr. Sentman's performance
during 1997.

(15) Includes 70,000 replacement options granted in exchange for the
cancellation of all outstanding options held by Mr. Sentman in connection
with the Company's repricing of stock options on October 30, 1997. See
"Report of the Board of Directors on Executive Compensation and Stock
Option Repricing."

(16) Of this amount, $45,000 was paid in 1997 based upon Mr. Sentman's
performance during 1996.

(17) Includes 50,000 replacement options granted to Mr. Sentman in exchange for
the cancellation of all outstanding options held by him in connection with
the Company's repricing of stock options on December 17, 1996, and 10,000
options granted earlier in 1996 and replaced on December 17, 1996. See
"Report of the Board of Directors on Executive Compensation and Stock
Option Repricing."

(18) 10,000 of such options were granted in 1997 based upon the Named Executive
Officer's performance during 1996.

(19) Includes relocation expenses paid by the Company to Mr. Sentman in 1996.

(20) Includes 70,000 replacement options granted in exchange for the
cancellation of all outstanding options held by Mr. Holmes in connection
with the Company's repricing of stock options on April 23, 1998. See
"Report of the Board of Directors on Executive Compensation and Stock
Option Repricing."

(21) Includes automobile allowances paid by the Company to Mr. Holmes.

(22) This amount was paid during 1998 based upon Mr. Holmes' performance during
1997.

(23) Includes 50,000 replacement options granted in exchange for the
cancellation of all outstanding options held by Mr. Holmes in connection
with the Company's repricing of stock options on October 30, 1997. See
"Report of the Board of Directors on Executive Compensation and Stock
Option Repricing."

(24) Of this amount, $38,000 was paid in 1997 based upon Mr. Holmes' performance
during 1996.

(25) Includes 30,000 replacement options granted to Mr. Holmes in exchange for
the cancellation of all outstanding options held by him in connection with
the Company's repricing of stock options on December 17, 1997 and 10,000
options granted earlier in 1996 and replaced on December 17, 1996. See
"Report of the Board of Directors on Executive Compensation and Stock
Option Repricing."

8
<PAGE> 11

(26) Includes 24,500 replacement options granted in exchange for the
cancellation of all outstanding options held by Mr. Scott in connection
with the Company's repricing of stock options on April 23, 1998. See
"Report of the Board of Directors on Executive Compensation and Stock
Option Repricing."

(27) This amount was paid during 1998 based upon Mr. Scott's performance during
1997.

(28) Includes 14,500 replacement options granted in exchange for the
cancellation of all outstanding options held by Mr. Scott in connection
with the Company's repricing of stock options on October 30, 1997. See
"Report of the Board of Directors on Executive Compensation and Stock
Option Repricing."

(29) This amount was paid during 1997 based upon Mr. Scott's performance during
1996.

(30) Includes 10,000 replacement options granted to Mr. Scott in exchange for
the cancellation of all outstanding options held by him in connection with
the Company's repricing of stock options on December 17, 1996. See "Report
of the Board of Directors on Executive Compensation and Stock Option
Repricing."

(31) Mr. Sharabianlou joined the Company on May 6, 1998.

(32) These shares were granted during 1999 in connection with Mr. Sharabianlou's
employment with the Company.

STOCK OPTION GRANTS AND VALUES

The following table sets forth certain information regarding option grants
to the Named Executive Officers during 1998.

INDIVIDUAL GRANTS

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
PERCENT OF TOTAL ANNUAL RATES OF
OPTIONS STOCK PRICE APPRECIATION
NUMBER OF SECURITIES GRANTED TO EXERCISE OR FOR OPTION TERM
UNDERLYING OPTIONS EMPLOYEES IN BASE PRICE ------------------------
NAME GRANTED(#) FISCAL YEAR ($/SH.) EXPIRATION DATE 5%($) 10%($)
---- -------------------- ---------------- ----------- --------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Robert D. Hostetler.... 75,000(1) 19.9% $1.00 11/27/03 $30,533 $71,154
Robert D. Hostetler.... 45,000(2) 1.00 11/27/03 18,320 42,692
Robert D. Hostetler.... 30,000(3) 1.00 9/30/05 10,203 23,147
David K. Sentman....... 20,000(4) 14.6% 0.72 3/19/06 5,854 13,643
David K. Sentman....... 60,000(5) 1.00 11/27/03 24,426 56,923
David K. Sentman....... 10,000(6) 1.00 2/15/04 4,071 9,487
David K. Sentman....... 20,000(3) 1.00 9/30/05 8,142 18,974
Terry J. Holmes........ 20,000(4) 11.9% 0.72 3/19/09 5,854 13,643
Terry J. Holmes........ 40,000(5) 1.00 11/27/03 16,284 37,949
Terry J. Holmes........ 10,000(6) 1.00 2/15/04 4,071 9,487
Terry J. Holmes........ 20,000(3) 1.00 9/30/05 8,142 18,974
Bryan H. Scott......... 10,000(4) 4.6% 0.72 3/19/06 2,927 6,821
Bryan H. Scott......... 5,000(5) 1.00 11/27/03 2,036 4,744
Bryan H. Scott......... 5,000(5) 1.00 11/27/03 2,036 4,744
Bryan H. Scott......... 4,500(6) 1.00 2/15/04 1,832 4,269
Bryan H. Scott......... 10,000(3) 1.00 9/30/05 4,071 9,487
Nasser Sharabianlou.... 0 * -- -- -- --
</TABLE>

- ---------------

* less than one percent

(1) These options were granted to Mr. Hostetler on April 23, 1998 as replacement
options in return for cancellation of 75,000 options that were granted to,
Mr. Hostetler on October 30, 1997 with an exercise price of $2.00 per share.
A total of 37,500 of such replacement options were exercisable as of April
23, 1998, 18,750 vested on December 27, 1998 and 18,750 vest on December 27,
1999. See "Report of the Board of Directors on Executive Compensation and
Stock Option Repricing."

9
<PAGE> 12

(2) These options were granted to Mr. Hostetler on April 23, 1998 as replacement
options in return for cancellation of 45,000 options that were granted to
Mr. Hostetler on October 30, 1997 with an exercise price of $2.00 per share.
A total of 22,500 of such replacement options were exercisable as of April
23, 1998, 11,250 vested on December 27, 1998 and 11,250 vest on December 27,
1999. See "Report of the Board of Directors on Executive Compensation and
Stock Option Repricing."

(3) These options were granted on April 23, 1998 as replacement options in
return for cancellation of options that were granted on October 30, 1997
with an exercise price of $2.00 per share. A total of 33 1/3% of these
options vested on October 30, 1998 with the remainder vesting in equal
amounts on October 30, 1999 and October 30, 2000. See "Report of the Board
of Directors on Executive Compensation and Stock Option Repricing."

(4) These options were granted on March 19, 1998 with an exercise price of
$0.719 per share. Such options vest in increments of 33 1/3% per year
beginning on March 19, 1999.

(5) These options were granted on April 23, 1998 as replacement options in
return for cancellation of options that were granted on October 30, 1997
with an exercise price of $2.00 per share. A total of 50% of such
replacement options were exercisable as of April 23, 1998, 25% of such
options vested on December 27, 1998, and 25% vest on December 27, 1999. See
"Report of the Board of Directors on Executive Compensation and Stock Option
Repricing."

(6) These options were granted on April 23, 1998 as replacement options in
return for cancellation of options that were granted on October 30, 1997
with an exercise price of $2.00 per share. A total of 33 1/3% of these
options vested on March 15, 1998 with the remainder vesting in equal amounts
on March 15, 1999 and March 15, 2000. See "Report of the Board of Directors
on Executive Compensation and Stock Option Repricing."

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES TABLE

The following table sets forth certain information with respect to option
exercises by the Named Executive Officers during 1998 and the value of options
owned by the Named Executive Officers at December 31, 1998.

<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS
AT FY-END(#) AT FY-END($)
SHARES -------------- -------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
---- ----------- ----------- -------------- -------------
<S> <C> <C> <C> <C>
Robert D. Hostetler................... -0- $-0- 100,000/50,000 *
David K. Sentman...................... -0- -0- 55,001/54,999 *
Terry J. Holmes....................... -0- -0- 40,001/49,999 *
Bryan H. Scott........................ -0- -0- 12,334/22,166 *
Nasser Sharabianlou................... -0- -0- 0/0 *
</TABLE>

- ---------------

* All of the options held by such Named Executive Officers at December 31, 1998
had an exercise price of either $0.719 or $1.000 per share. The closing price
of the Company's Common Stock on December 31, 1998, as quoted on the OTC
Bulletin Board, was $0.188. Thus, none of the options held by such Named
Executive Officers were in-the-money at December 31, 1998.

EMPLOYMENT AGREEMENTS

The Company has entered into an employment agreement with Robert D.
Hostetler, President and Chief Executive Officer of the Company, effective July
1, 1998. Mr. Hostetler's employment agreement establishes his annual base cash
compensation at $215,400. The agreement further provides that Mr. Hostetler is
eligible

10
<PAGE> 13

to receive an annual cash bonus pursuant to the Company's bonus plan for
executive officers. Mr. Hostetler is also eligible to participate in the
Company's stock option plan. Mr. Hostetler's employment agreement expires on
June 30, 1999, unless earlier terminated. Mr. Hostetler's agreement may be
terminated by the Company with or without cause at any time without prior
notice, and by Mr. Hostetler at any time upon 30 days' prior notice to the
Company. The agreement provides that Mr. Hostetler is entitled to receive
severance payments equal to twelve months' base salary in the event the
agreement is terminated by the Company without cause. Mr. Hostetler's employment
agreement prohibits him from competing with the Company during the period of his
employment and for one year thereafter.

The Company has an employment agreement with David K. Sentman, Senior Vice
President and Chief Financial Officer of the Company. The agreement establishes
Mr. Sentman's minimum base salary at $130,000, subject to increases of at least
5% per year or such other increases as may be approved by the Company. Mr.
Sentman's current base salary is $162,000. Pursuant to his employment agreement,
Mr. Sentman is also eligible to receive a cash bonus with respect to each
calendar year of up to 40% of his base salary. Mr. Sentman's employment
agreement expires on August 10, 2000. Mr. Sentman's agreement may be terminated
by the Company with or without cause at any time without prior notice. The
agreement provides that Mr. Sentman is entitled to receive severance payments
equal to one year's base salary plus accrued bonus in the event the agreement is
terminated without cause, and two year's base salary plus accrued bonus under
certain circumstances following a change in control of the Company. The
agreement also prohibits Mr. Sentman from competing with the Company for the
term of his employment and for one year thereafter.

The Company has an employment agreement with Terry J. Holmes, Senior Vice
President of the Company. The employment agreement establishes an annual base
salary of $131,500 and provides for base salary increases of at least 5% per
year. Mr. Holmes current base salary is $144,500. The agreement also provides
that Mr. Holmes will be eligible to receive annual cash bonuses pursuant to the
Company's bonus plan for executive officers and to participate in all benefit
programs generally applicable to executive officers. The agreement expires on
April 30, 2000, unless earlier terminated. The agreement is terminable by the
Company with or without cause at any time and by the employee upon 30 days'
prior written notice to the Company. The agreement provides that Mr. Holmes is
entitled to receive severance payments equal to one year's base salary plus
accrued bonus in the event the agreement is terminated without cause or in the
event of voluntary termination following certain changes in employment
conditions. The agreement also prohibits Mr. Holmes from competing with the
Company for his term of employment and for one year thereafter.

The Board of Directors has authorized the extension of the employment
agreements for Mr. Hostetler, Mr. Sentman and Mr. Holmes. Amendments to that
effect have not yet been executed. The extension would be through February 28,
2001. Thereafter, the expiration dates of their employment agreements would be
automatically extended for additional one year periods unless, at least one year
before the then-effective expiration date, either the Company or Mr. Hostetler,
Mr. Sentman or Mr. Holmes provides written notice that they intend to terminate
the employment agreement on the then-effective expiration date.

11
<PAGE> 14

REPORT OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION AND STOCK OPTION REPRICING

The Board of Directors makes this report on executive compensation pursuant
to Item 402 of Regulation S-K. Notwithstanding anything to the contrary set
forth in any of the Company's previous filings under the Securities Act of 1933,
as amended, or the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), that might incorporate future filings, including this Proxy Statement in
whole or in part, this report and the graph which follows this report shall not
be incorporated by reference into any such filings, and such information shall
be entitled to the benefits provided in Item 402(a)(9) of Regulation S-K.

Most compensation arrangements for the Company's executive management are
recommended by the Company's Compensation Committee (the "Committee") and
reviewed and approved by the Board of Directors. The Committee is involved in
formulating the Company's overall compensation philosophy and establishing the
policies, standards and objectives upon which the compensation decisions are
based. Pursuant to these policies and criteria, the Committee recommends to the
Board of Directors the cash compensation to be paid to the Company's executive
officers, including the Chief Executive Officer. The Committee also recommends
to the Board of Directors the key employees to whom stock options should be
granted under the Company's 1990 Stock Option Program, as amended (the "Plan"),
the number of shares covered by each such grant, the exercise or purchase price
per share, the repricing of stock option grants and the other terms and
provisions governing each grant of options under the Plan. The Committee
typically meets one to three times per year to review executive management
performance and compensation and to recommend bonuses and stock option grants
for executive officers and key employees of the Company. The Committee also
meets on an as-needed basis to recommend compensation for newly created or
expanded executive positions or compensation programs. All cash compensation
arrangements and stock option grants recommended by the Committee are subject to
approval by the full Board of Directors. During 1998, the Committee held one
meeting and acted once by unanimous written consent. The Board of Directors
elected to address directly several compensation issues, including stock option
repricing, Chief Executive Officer compensation, an executive officer and key
employee retention program and executive officer employment contracts.

COMPENSATION PHILOSOPHY

The overall objectives of the Company's executive compensation policies are
to attract, retain and reward highly-skilled and motivated executive officers
who contribute to the Company's success, to align the financial interests of
executive officers with the performance of the Company, to strengthen the
relationship between executive pay and shareholder value, to motivate executive
officers to achieve the Company's business objectives and to reward individual
performance. During 1998, a specific objective of the Company was the retention
of executive officers and certain key employees in a distressed financial and
high risk environment. The Board of Directors believes that executive officers
and certain key employees are important to maintaining the Company's operations
while attempting to implement the Company's business strategy and seeking one or
more strategic partners and investors to facilitate the deployment of a wireless
broadband access business. The Board of Directors believes that implementing a
wireless broadband access business strategy and aligning with one or more
strategic partners and investors to deploy a wireless broadband access business
is currently the most effective means for shareholders and bondholders to
realize some value from their investments. During 1998, the Company used base
salary, executive officer cash bonuses, executive officer and key employee
retention programs and a stock option grant and a stock option repricing to
achieve these objectives. The Board of Directors attempted to balance the
various compensation objectives with the Company's available and projected cash
resources. The Board of Directors believes that a substantial portion of the
annual compensation of each executive officer should be influenced by the
performance of the Company, within the current and anticipated constraints of
its capital resources, as well as the individual contribution of each executive
officer toward implementing the Company's operating and strategic objectives and
the responsibility and authority of each position relative to other positions
within the Company. The Board of Directors continues to review various
compensation arrangements and programs for executive officers in a financially
distressed, highly dynamic and risky environment, balanced with the Company's
financial resources and the fiduciary obligations of the Board of Directors to
shareholders and bondholders.

12
<PAGE> 15

Federal tax law establishes certain requirements in order for compensation
exceeding $1 million earned annually by the Named Executive Officers to be
deductible. Because the total compensation for executive officers of the Company
is significantly below the $1 million threshold, the Board of Directors has not
yet had to address the issues relative thereto.

BASE SALARY

The Company's base salary levels are usually recommended by the Committee
and approved by the Board of Directors annually for each executive officer. The
level of base compensation is intended to be competitive with other comparable
positions within the wireless cable and telecommunications industries. Base pay
is determined on a case by case basis in relation to an individual's background,
experience, accomplishments, market conditions, expected contribution to
achieving the Company's strategic objectives and estimated financial resources
of the Company. While the Committee and the Board of Directors from time to time
consider the low, midpoint and upper ranges of base salaries published by
compensation surveys in establishing base salaries of executive officers of the
Company, the Company does not have a policy or target of how each executive
officer's base salary, or salaries of executive officers as a group, should
compare with the low, midpoint or upper ranges of compensation surveys.

For 1998 the Board of Directors determined that executive officers should
be eligible to earn bonuses of up to 40% of base cash compensation based upon
their performance and the performance of the Company. The Board of Directors
further determined that for the executive officers (1) one-quarter of a cash
bonus should be determined by measuring the performance of each executive
officer against pre-established operating performance and/or liquidity targets
of the Company, (2) one-quarter should be based upon personal performance
objectives, (3) one-quarter should be based upon discretionary factors, and (4)
one-quarter should be based upon the judgment of the Board of Directors of the
financial condition of the Company. The Board of Directors established executive
performance targets for 1998 in three areas that were determined by the Board of
Directors to be critical to measuring the Company's operating results: operating
cash flow, cash balances and customer churn levels. The Board of Directors
reserved the right to pay no cash bonuses at all to executive officers if it
determined that it would be in the best interests of the Company and its
shareholders and bondholders to refrain from such payments.

STOCK OPTION GRANTS AND REPRICING

All executive officers and key employees of the Company are eligible to
participate in the Plan. The purpose of the Plan has been to provide incentives
to management to maximize shareholder value by providing management with
opportunities to acquire shares of the Company's Class A Common Stock. Options
are granted to executive officers and key employees whom the Board of Directors
determines to be responsible for the future creation or maintenance of value for
shareholders of the Company, based upon recommendations of the Committee. The
Board of Directors generally believes that equity ownership by executive
officers provides incentives to build shareholder value and aligns the interests
of executive officers with the shareholders. Options are granted at the market
price of the Company's Class A Common Stock on the date of grant and,
consequently, have value only if the price of the Company's Class A Common Stock
increases over the exercise price for the period during which the options are
exercisable.

The Committee typically recommends that a stock option be granted under the
Plan upon hiring executive officers, subject to a vesting schedule. The size of
an initial grant is usually determined with reference to the position of the
executive officer, the contribution that the executive officer is expected to
make to the Company, and the comparable equity compensation offered by other
companies in the telecommunications and cable industries.

After an initial stock option grant, the Committee recommends additional
grants under the Plan, usually on an annual basis. Such awards are based upon
performance criteria similar to those applicable to cash bonus payments and, for
approximately the past two years, the need to motivate and retain key executives
at a time of substantial uncertainty and significant challenges for the Company.
From 1996 to approximately mid-1997, the Company also based stock option grants
upon target levels of stock option compensation (using Black-

13
<PAGE> 16

Scholes valuation estimates) over a five-year period as a multiple of annual
base salaries. After approximately mid-1997, the Committee determined that
Black-Scholes valuation estimates had become ineffective as a guide to determine
future stock option grants because of the low level of the market price for the
Company's Class A Common Stock and because of the highly dynamic nature of the
Company's business, and the Committee thereafter has relied upon its judgment.
In recommending the size of periodic grants, the Committee also considers prior
option grants to an executive officer, regardless of whether the options have
been exercised, the executive officer's historical performance, the importance
of the executive officer to the Company and his or her expected future
contributions. Exceptions are made to the annual grants and typical vesting
schedules when the Board of Directors believes, based upon recommendations of
the Committee, that additional option grants or accelerated vesting will match
special circumstances of the Company or reward the contribution of an individual
executive officer or key employee.

Since 1996, the Board of Directors has approved the repricing of
outstanding stock options on three separate occasions for executive officers
(including the Named Executive Officers) and other option holders. In making
these determinations, the Board of Directors has considered that the exercise
price of the vast majority of the outstanding stock options made them of nominal
value from the viewpoint of the option holder, considering the then current
market price of the Company's Class A Common Stock. The Board of Directors was
concerned that the Company might, at critical points in its development, lose
the benefit of a key incentive in its compensation philosophy and, thereby, make
it more difficult for the Company to retain talented personnel. By bringing the
exercise price of all outstanding stock options more in line with the then
current market conditions, the Board of Directors believed that the Company's
executive officers and other key employees would be more motivated to focus on
increasing shareholder value. During 1998, the Board of Directors authorized one
such stock option repricing when, on April 23, 1998, outstanding stock options
were repriced for executive officers (including Named Executive Officers) and
other key employees to $1.00 per share. Immediately before such repricing, the
market price per share for the Company's Class A Common Stock was approximately
$.625.

EXECUTIVE AND KEY EMPLOYEE RETENTION PROGRAM

During the first half of 1998, the Board of Directors became more concerned
that the Company might lose the services of one or more executive officers
(including one or more of the Named Executive Officers) and certain key
employees. One Senior Vice President and one Vice President in fact resigned
from employment with the Company during 1998. The Board of Directors concluded
that some additional incentive was required to retain the services of executive
officers and certain key employees, especially considering the important roles
that the executive officers fulfilled in attempting to implement the Company's
goal of seeking one or more strategic partners and investors. Accordingly, the
Board of Directors, effective July 1, 1998, adopted a Retention and Achievement
Incentive Program ("Executive Program") for its executive officers. Under the
Executive Program, the executive officers of the Company are each eligible to
receive cash retention payments of $40,000-$50,000 if such individuals remain in
the Company's employment through June 30, 1999 or if the employment of such
individuals with the Company is terminated by the Company without cause prior to
June 30, 1999. The maximum aggregate retention payment that are payable under
the Executive Program are approximately $320,000. The Executive Program also
provides for the payment of achievement incentives to certain executive officers
if the average closing price of the Company's Class A Common Stock is $2.00 per
share or higher for the average of the last 20 trading days of June 1999.
One-half of the achievement incentives are payable if such average closing price
is $2.00 per share, and the full achievement incentives are payable if such
average closing price per share is $3.00 per share or higher. If achievement
incentives are payable, then the first 40% of such incentives are payable by the
Company in cash, and the remaining 60% may be paid in cash or in Class A Common
Stock, or a combination thereof, at the discretion of the Company. Appropriate
adjustments in the achievement incentives will be made to give effect to changes
in the Class A Common Stock resulting from subdivisions, consolidations or
reclassifications of the Class A Common Stock, the payment of dividends or other
distributions by the Company (other than in the ordinary course of business),
mergers, consolidations, combinations or similar transactions or other relevant
changes in the capital structure of the Company. The maximum aggregate
achievement payments that are payable under the Executive Program are
approximately $900,000. Certain executives covered under the
14
<PAGE> 17

Executive Program who do not have employment contracts with the Company have
severance benefits ranging from six to ten months for a total maximum of
approximately $200,000, in the event their employment is terminated by the
Company for other than cause on or before December 31, 1999. In establishing the
level of retention payments, achievement incentives and severance benefits, the
Board of Directors considered the expected financial resources of the Company to
make such payments. The Executive Program is evidenced by agreements between the
Company and each executive officer. The amounts payable under the Executive
Program are independent of any obligations of the Company, including severance
payments, under employment agreements or other bonus programs. Since the
implementation of the Executive Program, one executive officer has resigned from
the employment of the Company. To date no amounts have been paid by the Company
under the Executive Program.

The Board of Directors also approved, effective July 1, 1998, a retention
program for certain other key employees, similar to the Executive program except
that amounts payable to each key employee range from $12,500-$40,000, the
severance benefits range from three to six months base salary and the program
has no achievement incentive.

The Board of Directors continues to review the retention and motivation of
executive officers and key employees and intends to review the retention
programs again before July 1, 1999.

COMPENSATION OF THE PRESIDENT AND CHIEF EXECUTIVE OFFICER

The Committee and the Board of Directors review the performance of the
Company's President and Chief Executive Officer at least annually. From July 1,
1997 through June 30, 1998, pursuant to an employment agreement, Robert D.
Hostetler received base cash compensation at an annual rate of $203,200. Mr.
Hostetler was also offered and accepted the opportunity to reprice his stock
options as of April 23, 1998, along with all other option holders.

In July 1998, the Board of Directors reviewed Mr. Hostetler's performance
and the desirability of entering into another employment agreement with Mr.
Hostetler. The Board of Directors took into consideration Mr. Hostetler's past
and expected future contributions to seeking one or more strategic partners and
investors, to developing the vision and direction for a wireless broadband
access business strategy for the Company, managing the Company's operating cash
flow, liquidity, employment levels, analog video and high-speed Internet access
operations and advanced technology trials, to retaining executive officers and
other key employees, and to improving the overall management and operating
personnel of the Company. The Board of Directors also took into account Mr.
Hostetler's overall leadership of the Company and other factors that it
considered relevant. The Company offered to Mr. Hostetler, and Mr. Hostetler
accepted, a new employment agreement through June 30, 1999, at a base annual
cash compensation level of $215,400, effective July 1, 1998. The Board of
Directors also awarded Mr. Hostetler a cash bonus of $77,000 for the period July
1, 1997 through June 30, 1998. In awarding the cash bonus, the Board of
Directors considered, in addition to the items enumerated above in this
paragraph, the Company's level of achievement of its pre-established operating
objectives for the second half of 1997 and for the first half of 1998 and other
components of the Company's bonus programs for 1997 and 1998.

15
<PAGE> 18

In establishing Mr. Hostetler's base salary, the Committee and the Board of
Directors has considered base compensation levels of other chief executive
officers in the wireless cable, hard franchise cable and telecommunications
industries, Mr. Hostetler's executive experience and knowledge of the wireless
cable industry, his key role in implementing a wireless broadband access
business strategy and in attempting to attract strategic partners and investors
to the Company, and his expected future contributions to the Company. The Board
of Directors believes that Mr. Hostetler's base annual cash compensation level
is in the middle of the compensation range for similar positions in the wireless
cable industry. Mr. Hostetler also holds a substantial equity participation in
the Company through his ownership of Class A Common Stock and the stock option
arrangements described above. Therefore, a meaningful portion of Mr. Hostetler's
total compensation and net worth is linked directly to the creation and
maintenance of shareholder value.

Respectfully submitted,

The Board of Directors

Donald R. DePriest
Richard F. Seney
James S. Quarforth
Carl A. Rosberg
Robert D. Hostetler
Mitchell R. Hauser
- ---------------

In determining whether Mr. Hostetler's compensation was comparable to the
compensation of other chief executives, the Board of Directors limited its
comparison to other public companies in the wireless cable industry, a
relatively small subset of the cable and telecommunications industry. To date,
the Board of Directors has believed that such a comparison was more meaningful
than a comparison between its compensation levels and the compensation levels of
much larger and more highly capitalized companies comprising the
telecommunications industry as a whole. Because the wireless cable industry is a
relatively small and rapidly changing industry and because the Company is
attempting to implement a wireless broadband access business strategy, the
Company compared its stock performance in the Stock Performance Graph to the
Telecommunications Index, which is comprised of companies representing the
telecommunications industry as a whole.

16
<PAGE> 19

TEN-YEAR OPTION REPRICINGS

<TABLE>
<CAPTION>
LENGTH OF
NUMBER OF ORIGINAL
SECURITIES MARKET PRICE EXERCISE OPTION TERM
UNDERLYING OF STOCK AT PRICE NEW REMAINING
OPTIONS TIME OF AT TIME OF EXERCISE AT DATE OF
NAME DATE REPRICED REPRICING REPRICING PRICE REPRICING
---- -------- ---------- ------------ -------------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Robert D. Hostetler(1)........ 12/17/96 30,000 $6.875 $ 11.75 $6.875 6.17
Robert D. Hostetler........... 12/17/96 15,000 6.875 13.75 6.875 7.00
Robert D. Hostetler........... 12/17/96 75,000 6.875 14.375 6.875 7.00
Robert D. Hostetler........... 10/30/97 120,000 2.000 6.875 2.000 7.13
Robert D. Hostetler........... 04/23/98 30,000 0.594 2.000 1.000 7.52
Robert D. Hostetler........... 04/23/98 75,000 0.594 2.000 1.000 5.68
Robert D. Hostetler........... 04/23/98 45,000 0.594 2.000 1.000 5.68
David K. Sentman(2)........... 12/17/96 50,000 6.875 12.75 6.875 6.50
David K. Sentman.............. 12/17/96 10,000 6.875 15.00 6.875 7.36
David K. Sentman.............. 10/30/97 10,000 2.000 3.687 2.000 7.33
David K. Sentman.............. 10/30/97 60,000 2.000 6.875 2.000 7.13
David K. Sentman.............. 04/23/98 20,000 0.594 2.000 1.000 7.52
David K. Sentman.............. 04/23/98 10,000 0.594 2.000 1.000 5.90
David K. Sentman.............. 04/23/98 60,000 0.594 2.000 1.000 5.68
Terry J. Holmes(3)............ 12/17/96 15,000 6.875 13.75 6.875 6.50
Terry J. Holmes............... 12/17/96 15,000 6.875 13.75 6.875 7.00
Terry J. Holmes............... 12/17/96 10,000 6.875 15.00 6.875 7.36
Terry J. Holmes............... 10/30/97 10,000 2.000 3.687 2.000 7.33
Terry J. Holmes............... 10/30/97 40,000 2.000 6.875 2.000 7.13
Terry J. Holmes............... 04/23/98 20,000 0.594 2.000 1.000 7.52
Terry J. Holmes............... 04/23/98 10,000 0.594 2.000 1.000 5.90
Terry J. Holmes............... 04/23/98 40,000 0.594 2.000 1.000 5.68
Bryan H. Scott(4)............. 12/17/96 5,000 6.875 11.75 6.875 6.20
Bryan H. Scott................ 12/17/96 5,000 6.875 15.00 6.875 7.36
Bryan H. Scott................ 10/30/97 5,000 2.000 6.875 2.000 7.13
Bryan H. Scott................ 10/30/97 5,000 2.000 6.875 2.000 7.13
Bryan H. Scott................ 10/30/97 4,500 2.000 3.687 2.000 7.33
Bryan H. Scott................ 04/23/98 10,000 0.594 2.000 1.000 7.52
Bryan H. Scott................ 04/23/98 4,500 0.594 2.000 1.000 5.90
Bryan H. Scott................ 04/23/98 5,000 0.594 2.000 1.000 5.68
Bryan H. Scott................ 04/23/98 5,000 0.594 2.000 1.000 5.68
</TABLE>

- ---------------

(1) President and Chief Executive Officer

(2) Senior Vice President and Chief Financial Officer

(3) Senior Vice President

(4) Vice President -- Engineering

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<PAGE> 20

COMMON STOCK PERFORMANCE GRAPH

The following graph compares the percentage change in the Company's
cumulative total shareholder return on its Class A Common Stock for the period
during which the Class A Common Stock has been registered under Section 12 of
the Exchange Act against the cumulative total return of the Nasdaq Total Return
(U.S.) Index (the "Nasdaq Index") and the cumulative total return of the Nasdaq
Telecommunications Index (the "Telecommunications Index") for the same period.
The graph assumes an investment of $100 on December 10, 1993 (the date on which
trading in the Common Stock commenced) in each of the Class A Common Stock and
the stocks comprising the Nasdaq Index and the Telecommunications Index, and
assumes reinvestment of dividends, if any. EFFECTIVE OCTOBER 17, 1997, TRADING
IN THE CLASS A COMMON STOCK WAS TRANSFERRED FROM THE NASDAQ NATIONAL MARKET TO
THE NASDAQ SMALLCAP MARKET. EFFECTIVE OCTOBER 28, 1998, THE CLASS A COMMON STOCK
WAS DELISTED FROM THE NASDAQ SMALLCAP MARKET AND BECAME ELIGIBLE FOR TRADING ON
THE OTC BULLETIN BOARD.

PERCENTAGE CHANGE

<TABLE>
<CAPTION>
AMERICAN
MEASUREMENT PERIOD NASDAQ TELECOMMUNICATIONS TELECASTING,
(FISCAL YEAR COVERED) INDEX INDEX INC.
<S> <C> <C> <C>
12/10/93 0.00 0.00 0.00
12/31/93 2.79 3.46 0.00
12/31/94 0.48 -13.66 -43.06
12/31/95 42.11 13.04 -19.44
12/31/96 74.75 15.58 -68.06
12/31/97 114.39 71.15 -93.06
12/31/98 201.38 179.50 -98.96
</TABLE>

BOARD OF DIRECTORS INTERLOCKS AND INSIDER PARTICIPATION

Compensation arrangements for the Company's executive management are
recommended by the Compensation Committee and reviewed and approved by the Board
of Directors. Messrs. DePriest, Seney, Quarforth, Rosberg, Hostetler and Hauser
are members of the Board of Directors. Mr. Hostetler is President and Chief
Executive Officer of the Company. In 1998, Mr. Hostetler, along with his wife,
owned 28% of the stock of Fresno Telsat, Inc. ("FTI"). In 1994, FTI commenced a
lawsuit against the Company, Mr. Hostetler, Mr. Holmes, and certain other named
and unnamed defendants. Pursuant to a settlement following trial, the complaint
against the Company and Mr. Holmes was dismissed with prejudice on July 10,
1998. On October 20, 1998, the court entered judgment in favor of Mr. Hostetler
on all claims against him and ordered FTI to pay certain of his costs as
required by law. On July 10, 1998, the Company purchased from FTI the remaining
35% partnership interest that the Company did not already own in Fresno MMDS
Associates for cash consideration of $1.5 million plus contingent cash
consideration of up to $255,000, the precise amount of which will depend upon
the outcome of litigation between the Company and the Fresno County
Superintendent of Schools. Through two of its subsidiaries, the Company is now
the 100 percent owner of Fresno MMDS Associates. Mr. Hostetler and his wife
asserted claims against FTI as creditors, and were engaged in disputes with
other creditors and shareholders of FTI regarding their respective entitlements
to the assets of FTI. The

18
<PAGE> 21

money paid by the Company to FTI to acquire FTI's partnership interest in Fresno
MMDS Associates, and the contingent consideration which may be paid in the
future, constituted the principal sources of funds available to satisfy the
claims of the various parties to the disputes. In December 1998, Mr. and Mrs.
Hostetler settled their claims against FTI and other creditors and shareholders.
Pursuant to such settlement, they received certain cash consideration, received
the right to 20% of any deferred consideration paid to FTI by the Company and
transferred all their stock in FTI to other parties to the settlement. Messrs.
DePriest and Seney are both officers of the Company, but do not receive any
compensation from the Company for their services as officers, except for
reimbursement of out-of-pocket expenses incurred in connection with certain
activities on behalf of the Company. Mr. DePriest and Mr. Seney served as
members of the Board of Directors of WJG Maritel. Mr. Hauser is the President
and Chief Executive Officer of WJG Maritel, a member of its Board of Directors,
and is also a member of the Company's Board of Directors. Except as described
with respect to WJG Maritel, no executive officer of the Company served as a
director or member of the compensation committee of another entity, one of whose
executive officers served as a director of the Company.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Pursuant to an Investment Agreement dated January 19, 1991, between CFW and
the Company, the Company provides certain advisory services to CFW in connection
with the development of wireless cable systems developed by CFW in the
Commonwealth of Virginia. In return, the Company is entitled to receive payments
equal to 10% of the earnings (as defined in the agreement) of each such wireless
cable system for a 15-year period after the system has achieved cumulative
pre-tax income. CFW currently operates wireless cable systems in Charlottesville
and other cities within the Shenandoah Valley, and maintains certain wireless
cable channel rights in Richmond and Lynchburg, Virginia. None of such systems
have yet achieved cumulative pre-tax income.

In 1998, Mr. Hostetler, along with his wife, owned 28% of FTI. In 1994, FTI
commenced a lawsuit against the Company, Mr. Hostetler, Mr. Holmes, and certain
other named and unnamed defendants. Pursuant to a settlement following trial,
the complaint against the Company and Mr. Holmes was dismissed with prejudice on
July 10, 1998. On October 20, 1998, the court entered judgment in favor of Mr.
Hostetler on all claims against him and ordered FTI to pay certain of his costs
as required by law. On July 10, 1998, the Company purchased from FTI the
remaining 35% partnership interest that the Company did not already own in
Fresno MMDS Associates for cash consideration of $1.5 million plus contingent
cash consideration of up to $255,000, the precise amount of which will depend
upon the outcome of litigation between the Company and the Fresno County
Superintendent of Schools. Through two of its subsidiaries, the Company is now
the 100 percent owner of Fresno MMDS Associates. Mr. Hostetler and his wife
asserted claims against FTI as creditors, and were engaged in disputes with
other creditors and shareholders of FTI regarding their respective entitlements
to the assets of FTI. The money paid by the Company to FTI to acquire FTI's
partnership interest in Fresno MMDS Associates, and the contingent consideration
which may be paid in the future, constituted the principal sources of funds
available to satisfy the claims of the various parties to the disputes. In
December 1998, Mr. and Mrs. Hostetler settled their claims against FTI and other
creditors and shareholders. Pursuant to such settlement, they sold all their
stock in FTI in exchange for certain cash consideration, and the right to
receive 20% of any deferred consideration paid to FTI by the Company.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than ten percent of a registered
class of the Company's equity securities (collectively, "Reporting Persons"), to
file with the Securities and Exchange Commission ("SEC") initial reports of
ownership and reports of changes in ownership of Common Stock and other equity
securities of the Company. Reporting persons also are required by SEC regulation
to furnish the Company with copies of all Section 16(a) forms that are filed
with the SEC. Based solely on a review of the copies of such reports furnished
to the Company and representations that no other reports were required, the
Company believes that

19
<PAGE> 22

all Reporting Persons complied with all Section 16(a) filing requirements for
the fiscal year ended December 31, 1998.

PROPOSAL NO. 2 -- SELECTION OF INDEPENDENT AUDITORS

Since 1988, the firm of Arthur Andersen LLP, independent auditors, has
examined and reported on the financial statements of the Company. The Board of
Directors, upon recommendation of the Audit Committee, has appointed Arthur
Andersen LLP as independent auditors to examine and report on the financial
statements of the Company for the fiscal year ending December 31, 1999, subject
to stockholder approval.

During the year ended December 31, 1998, Arthur Andersen LLP provided the
Company with audit services, including examinations of and reporting on the
Company's consolidated financial statements, and certain accounting advisory
services. Representatives of Arthur Andersen LLP are expected to be present at
the Annual Meeting and will have the opportunity to make any statements they may
desire. They also will be available to respond to appropriate questions of the
stockholders.

Approval of the appointment of Arthur Andersen LLP as independent auditors
requires the affirmative vote of the holders of a majority of the shares of
Class A Common Stock present in person or represented by proxy at the Annual
Meeting. If the appointment is not approved, the Board of Directors will select
other independent accountants.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THIS APPOINTMENT
(ITEM NO. 2 ON THE ENCLOSED PROXY CARD).

STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING

Stockholders may submit proposals on matters appropriate for stockholder
action at the Company's 2000 Annual Meeting of Stockholders, consistent with
rules and regulations of the SEC. Proposals of stockholders intended to be
presented at the Company's 2000 Annual Meeting should be received by the
President of the Company at the above address no later than November 26, 1999,
in order to be included in the Company's Proxy Statement and form of Proxy
relating to that meeting.

OTHER MATTERS

The Board of Directors is not aware of any matters to come before the
meeting other than the election of directors, and the proposal to approve the
appointment of Arthur Andersen LLP as the Company's independent auditors for the
fiscal year ending December 31, 1999. If any other matter should come before the
meeting, the persons named in the enclosed proxy card will have discretionary
authority to vote all proxies with respect thereto in accordance with their
judgment.

Please sign and return promptly the enclosed proxy card in the envelope
provided. The signing of a Proxy will not prevent your attending the meeting and
voting in person.

BY ORDER OF THE BOARD OF DIRECTORS
/s/ ROBERT D. HOSTETLER

ROBERT D. HOSTETLER
President and Chief Executive
Officer

Dated: March 26, 1999

20
<PAGE> 23

AMERICAN TELECASTING, INC.
5575 Tech Center Drive, Suite 300
Colorado Springs, Colorado 80919

PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF AMERICAN TELECASTING,
INC. FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL 22, 1999

The undersigned hereby appoint(s) Robert D. Hostetler, Richard F. Seney and
each of them, as proxies to represent and vote the shares held by the
undersigned at the Annual Meeting of Stockholders of American Telecasting, Inc.
("Company") to be held April 22, 1999, or at any adjournments thereof as
follows:

DIRECTORS RECOMMEND: A vote FOR election of directors (proposal 1), and a
vote FOR the appointment of Arthur Andersen LLP as
independent auditors (proposal 2), all of which have
been proposed by the Board of Directors.

1. ELECTION OF DIRECTORS: For all nominees Withhold all nominees

(1) Donald R. DePriest (2) Richard F. Seney (3) Robert D. Hostetler
(4) Carl A. Rosberg (5) Mitchell R. Hauser (6) James S. Quarforth

INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE PLACE
AN "X" IN THIS BOX [ ] AND STRIKE A LINE THROUGH THE NOMINEE'S
NAME LISTED ABOVE.

(Continued and to be signed on reverse side)

<PAGE> 24

2. APPOINTMENT OF INDEPENDENT AUDITORS: The appointment of Arthur Andersen LLP
as independent auditors of the Company for the fiscal year ending December
31, 1999.

FOR AGAINST ABSTAIN

* Note: If any other matters properly come before the meeting or any
adjournment thereof, this proxy will be voted according to the judgment of
the persons named above as proxies.

All of the above matters are more particularly described in the Company's
Proxy Statement dated March 26, 1999, relating to such annual meeting to be held
on April 22, 1999, receipt of which is hereby acknowledged.

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS SPECIFIED BY THE
UNDERSIGNED STOCKHOLDER. IF NO CHOICE IS SPECIFIED BY THE STOCKHOLDER, THE PROXY
WILL BE VOTED "FOR" ALL NOMINEES FOR DIRECTOR AND "FOR" PROPOSAL 2 AND IN THE
PROXY'S DISCRETION ON ANY OTHER MATTERS TO COME BEFORE THE MEETING.

Dated , 1999
----------------------------------

----------------------------------
SIGNATURE

----------------------------------
SIGNATURE IF HELD JOINTLY

Signature(s) should correspond with the name
appearing on the label hereon. When signing in a
fiduciary or representative capacity, give full
title as such. Where more than one owner, each
should sign.